Fitch affirms Banco Rural

Fitch Ratings said it affirms Brazil-based Banco Rural SA's BB- long-term and B short-term national ratings and 5 support rating and removed them from Rating Watch negative. The outlook is negative.

These rating actions reflect Fitch's opinion that, although the bank's liquidity continues to be under pressure, the composition and tenor of its liabilities indicate that the maturity period of its assets, together with the contingencies it is exploring, will allow the bank to continue to honor its commitments.

The bank's balance sheet for the second half of 2005 reflected a marked deterioration in asset quality, a reduction in equity to reserve for this deterioration, an increase in intangible assets relative to its capital base and tight liquidity, the agency said.

The negative outlook reflects Fitch's opinion that Banco Rural continues to be vulnerable to abrupt changes in its operational performance and that the bank faces an arduous task to resume operating in a suitable manner, with recurring operational profitability.

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